Trader founded digital asset Derivatives exchange, FTX, on Thursday, October 29th, listed a set of assets that are linked to high-demand equities. The San Francisco, USA, based exchange platform – through a collaboration with German financial operation, CM Equity AG, and Switzerland based financial product digitization firm, Digital Assets AG – now allows users to trade fractional Apple, Amazon, Tesla, Facebook and other hot Stocks, pegged to digital assets.
The move by FTX, to tokenize real-world assets, having them represented by digital assets which allow for fractional ownership, is in keeping with a growing trend in the digital asset arena. The timing of the offering could be construed as genius too, with the popularity of Bitcoin in institutional circles being near fever pitch lately.
FTX’s Chief Executive Officer, Sam Bankman-Fried stated that the offering was geared towards making Equities trading more accessible to individuals who would, traditionally, be kept out of these particular markets by high entry barriers;Investor Qualification requirements, costs, trade execution times, and what have you? Of trading Equities the traditional route, “for a lot of people it’s a hassle” remarked the trading platform’s CEO, alluding to the broad access to financial markets asset tokenization affords to retail traders. Now the lay investor can have a go at assets that are, classically, available to an elite few.
“These products demonstrate a powerful future, in which assets are digitized and traders have unlimited creative potential to express their beliefs about the markets,” – Bankman-Fried, CEO, FTX.
The equity tokens, each, represent a fraction of a share of the underlying asset, and operate as ETF’s (Exchange Traded Funds) or depository receipts, as Bankman-Fried put it. Users who are interested in partaking of the offering will be required to perform a KYC verification process administered by CM Equity, and will also have to go through CM Equity, should they want to cash out their position.
“These fractional stock products reflect the reality that today’s traders are industry and sector spanning and want trading opportunities that fully match their interests and mindset” – Bankman-Fried
There will be no fees associated with holding the assets, trading however, comes with certain fees attached. Trading in the tokenized Stocks will be available to all FTX customers, but with be restricted in the United States, and several other restricted jurisdictions.
By listing tokenized securities, FTX joins, AplhaPoint, Fusang, STO Global-X, tZERO, and a host of other firms putting in concerted efforts towards convincing the traditional financial world to pivot in the direction of blockchain and tokenization. One can see why, as tokenization carries with it the potential, not only to allow Joe Average a shot at more sophisticated wealth building opportunities, but to – in turn – open firms and asset markets up to greater capital potential, by not being as jurisdictionally restrictive as traditional asset markets have been.
The sole fault one could, possibly, find with FTX’s equity token listing is the limited number of Equity assets on offer, but it’s still early days. One important thing is that they have helped prove that asset tokenization is indeed possible, and may go on to offer more tokenized assets in future. Perhaps, they might even go as far as offering securities that are exclusively, and wholly, listed on the platform. Though that is probably dependent on how far the practice of asset tokenization develops.